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Hike in interest rates by banks may hit housing demand: Realtors
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SME Times News Bureau | 13 May, 2022
Soon after the central bank Reserve Bank of India (RBI) raised the repo
rate by 40 basis points, the banking sector imitated the same by
increasing interest rates in lending and deposit schemes.
From major banks to even small finance banks, several joined the bandwagon of raising lending and deposits rate.
A
number of banks raised their external benchmark based lending rates
following an increase of 0.40 per cent in the repo rate -- at which the
RBI lends short term money to banks.
This move by the banks is expected to impact the growth of the real estate industry and may hit the housing demand.
"The
all-time low home loan interest regime had boosted the housing demand
and helped the economy to get back to the pre-Covid levels. It also
enabled a robust recovery in the real estate sector," said Kaushal
Agarwal -- Chairman, The Guardians Real Estate Advisory.
Now, the
move by the banks to hike the interest rates along with the rise in
input cost on construction might temporarily limit the growth momentum
of the real estate sector.
"The sharp acceleration of interest
rates by the banks will affect the homebuyers with concerns of EMI on
home loans. The state government, which is the largest beneficiary of
housing demand, should come forward to support the home buyers by
reducing stamp duty rate to 3 per cent," said Pritam Chivukula --
Co-Founder & Director, Tridhaatu Realty and Treasurer, CREDAI MCHI.
Realtors
feel that there might be a short-term impact on sales due to the rising
property prices further putting the brakes on the overall demand.
"We
have already started seeing a vertical movement in the home prices due
to higher input costs on construction and increased stamp duty. The move
by the banks to hike the interest rates will further put a dent on the
homebuyer's sentiments impacting the overall demand," said Shraddha
Kedia-Agarwal, Director, Transcon Developers.
Bhushan Nemlekar,
Director, Sumit Woods feels with the increasing prices of property would
be a huge setback for the real estate industry disrupting the ongoing
growth momentum in the sector.
Echoing Nemlekar's point of view,
Sachin Chopda, Managing Director, Pushpam Group said the upperward
revision in interest rates create a huge impact on the long-term goals
by the investors.
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